Its not the lack of redundancy. Virtualisation kan be expanded over several machines. fx we have a little blade center with 4 blades running about 12 servers ( just started at work so dunno for sure ) if one blade blows op. WMware will just automaticly assign the virtual servers to the other blades. instantly - without interupting the user ( dunno how it works. but i was told they could move their Exchange server without any problems, thats sewius bussines )

cost might be the only real answer here. Because if you have enough money - performance won't be a problem either.

If you have any sort of SQL on them id urge you to not trust VM. If the server actually fails completely, hot migration dont work.

That will almost certainly make data corruption on a busy database. VM failover only works fully as long as the machine has something to migrate from. Otherwise its like pulling the plug on a normal server and then booting it again. Not a wise thing to do with a SQL under load.

Use clustering whenever there is critical data. It is a good thing combined though. Except for the extra complexity.